Buisness growth Flashcards
What are the benefits of a business growing
1) Average costs of production go lower
2) Higher profit
3) Higher status
4)Bigger share in the market
What are the 2 ways a business can grow
Internal growth and external growth
What is internal growth
When a business uses its profits to open more outlets
What is external growth
When a business merges with another business can be a horizontal or vertical merge
What is a horizontal merge
Business in the same industry and in the same stage of production merge
What is a vertical merge
Businesses are in the same industry but in a different stage of production merge. Can be forward or backward
What is vertical forward interigation
When a business comes together with a business in a later stage of production
What is vertical backward interigation
When a business comes togethr with another business in previous stage of production
What is a conglomerat merger
When business in different industries and in a different stage of production
What is the benefit of conglomerat
It helps business exchange ideas
Name 3 disadvantages of business growth
Difficult to control
Higher costs
Market risk
Why do businesses remain small
1)A business owner can decide for the business to remain small cause it is easier to control
2)The specific product is not high in demand
Name 5 reasons why businesses fail
- Poor management
- Failure to plan for change
- Poor financial management
- Over expansion
